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NEW YORK — While Wal-Mart Stores Inc. lost the first of many lawsuits alleging nonpayment of overtime, the Department of Labor maintains the retailer is basically on the up and up.
This story first appeared in the December 23, 2002 issue of WWD. Subscribe Today.
While about 40 similar complaints are outstanding across the nation, there is little indication that they will be consolidated into a single class-action lawsuit against the world’s largest company.
A federal jury Thursday returned a guilty verdict against Wal-Mart for forcing employees to work unpaid overtime, as reported. The lawsuit involves about 400 employees at 18 stores in Oregon from 1994 to 1999. Damages will be decided in a separate trial.
Wal-Mart has yet to decide if it will appeal the case.
The lawsuit was filed in U.S. District Court in Portland, Ore.
Two former employees who held managerial positions at Wal-Mart stores in the Salem area filed the lawsuit. It alleged that the retailer forced employees to work after clocking out and reprimanded employees who claimed overtime.
A Department of Labor spokesman noted that over the past 10 years, it has had 277 cases involving Wal-Mart in its wage-and-hour division. “That’s not bad when you consider they have over 1 million employees,” he noted.
Of those cases, 79 percent were based on a complaint and a total of $2.9 million in back wages were ordered to be paid by the retailer. So far, Wal-Mart has paid 99 percent of the back wages.
Minimum wage or overtime cases accounted for 139 of the 277 cases. Ninety percent of those cases were based on complaints from employees. The 139 cases found $2.3 million of back pay due. Excluding a case involving pharmacists, who were owed $2.1 million in back pay, and another with an optical department manager who was owed $63,000, the other 137 cases resulted in an average wage recovery of slightly more than $1,000.
“Nobody’s perfect,” noted the DOL spokesman. “For an employer of [Wal-Mart’s] size, it’s not a whole lot of activity.”
Plaintiff attorney James Piotrowski, who is with the Boise, Ind.-based firm Nevin, Herzfeld, Benjamin & McKay, said his lawsuit was “one of many similar suits. This is the first one to go to trial, to go to a jury and result in a verdict, and the verdict was fairly and solidly for the workers.”
While the case won’t be applicable to the other cases, he did note the success could only help encourage those making similar actions.
Piotrowski, who is involved in two other lawsuits against Wal-Mart, said a national class-action lawsuit against the retailer was possible, though barriers do exist.
“To get a complete remedy for the workers, you need to tack on state law issues where you can, and state laws vary,” he noted. “It’s not impossible, but it’s a little more difficult to do a nationwide lawsuit because of that.”
He added: “What a lot of my clients have said to me is that the best thing about this is that they’ve finally found someone to listen about their problems at Wal-Mart.”
A Wal-Mart spokesman noted: “We have a procedure in place to correct pay situations that our associates call to our attention. If they feel they have not been paid properly, we look into it and we fix it. Our policy enables people to go all the way to the ceo if they feel the situation warrants it.”
Wal-Mart has fired managers for improperly addressing overtime pay and would do so again, said the spokesman, who did not know if any managers had been disciplined in relation to the case in Oregon.
“Wal-Mart does not dispute that associates are, from time to time, denied legitimate overtime pay, but those instances are clear violations of our policy and occur in scattered situations that are not the result of a company effort to deny associates the pay they deserve,” said the spokesman.
A.G. Edwards & Sons analyst Robert Buchanan said of Wal-Mart: “They’re so big the unions have targeted them, and so it’s critical that they’re perceived as being employee-friendly. Anything that detracts from that — and this [verdict] surely won’t help — could be problematical.”
Sam Walton, the company’s founder, Buchanan noted, went to great lengths to be as close to his employees and customers as possible. Walton’s business, though, has grown into a $218 billion empire — so large, he continued, that “there are going to be issues that come up.”
The analyst said Wal-Mart took advantage of its historically ever-rising stock price to compensate employees with options. “Now there’s really an onus on the company to pay more cash compensation, given that the stock price doesn’t go up every day,” he said. “There’s also an onus on the company to treat its employees well. I don’t think anybody’s trying to take advantage of anybody. You can’t do that. Everybody has to be on the same side. Everybody’s pulling the same ore. Being low cost and treating your employees fairly are not mutually exclusive.”
The guilty verdict does, however, add a data point in favor of those trying to unionize Wal-Mart, he noted.
In response to the verdict, Jill Cashen of the United Food & Commercial Workers International Union, which has been trying to organize workers at a number of Wal-Mart facilities for several years, said: “We think it’s great. We’re happy that when facing a jury trial, a jury believed what we have been saying for years — that Wal-Mart cheats its employees.”
Retail consultant Walter Loeb noted: “Very few people have really ever worked when they didn’t want to.” While executives at the retailer surely push to keep expenses low, Loeb said Wal-Mart’s human resource department is “too careful” to let that pressure unduly affect employee compensation. He added, though: “The culture of Wal-Mart has always been to do more, so maybe someone got too zealous.”